Microsoft Acquires Nuance Communications for $19.7 Billion

Microsoft entered into a definitive agreement to acquire Nuance Communications for $56 per share in an all-cash transaction valued at $19.7 billion, inclusive of Nuance’s net debt.

Nuance is a provider of conversational AI and speech technology for healthcare providers. Nuance’s products include the Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One for radiology reporting, all leading clinical speech recognition SaaS offerings built on Microsoft Azure.

According to Nuance Communications, its solutions are used by over 55% of physicians and 75% of radiologists in the U.S. and used in 77% of the hospitals.

Microsoft’s acquisition of Nuance builds on the existing partnership between the companies that was announced in 2019.

By augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions and the benefit of Nuance’s expertise and relationships with EHR systems providers, Microsoft will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services.

Microsoft said: the acquisition will double Microsoft’s total addressable market (TAM) in the healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion.

The transaction has been unanimously approved by the Boards of Directors of both Nuance and Microsoft. The deal is intended to close by the end of this calendar year. It is subject to approval by Nuance’s shareholders, the satisfaction of certain regulatory approvals, and other customary closing conditions.

Goldman Sachs is acting as an exclusive financial advisor to Microsoft, while Simpson Thacher & Bartlett is acting as its legal advisor. Evercore is acting as an exclusive financial advisor to Nuance, while Paul, Weiss, Rifkind, Wharton & Garrison is acting as its legal advisor.

A total of 184 digital health companies were acquired in 2020, compared to 169 in 2019, to Mercom’s Q4 and 2020 Digital Health Funding and M&A Report. Learn more about M&A activity in the digital health sector.